Written answers

Tuesday, 24 May 2016

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Social Democrats)
Link to this: Individually | In context | Oireachtas source

106. To ask the Minister for Finance his proposals to reduce the tax burden on so-called accidental landlords; and if he will make a statement on the matter. [11442/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In referring to "accidental landlords" I understand the Deputy means property owners in negative equity who have moved to alternative accommodation as a result of factors such as a growing family or a change in work location, while letting out their own property to other tenants.

Some accidental landlords may not have felt in a position to sell their property because they were in negative equity and a sale would crystallise the loss on the property. However, I would point out that the number of mortgages in negative equity is reducing. As noted in the Spring Quarterly Economic Commentary published by the ESRI, the numbers of mortgages in negative equity has fallen below 100,000 for the first time since 2008. This figure had been above 300,000 in 2011.

With regard to the taxation of rental income, the Deputy will be aware that landlords are liable to tax on their net rental profit after deduction of allowable letting expenses, and not on the gross rental income received. A landlord may be allowed a deduction of 75% of the interest paid on borrowed money used to purchase, improve or repair rented premises when calculating rental income. There are also a number of other allowances and deductions available to reduce the tax on rental income paid including the cost of maintenance, repairs, insurance and management of the property, and the cost to the landlord of any goods provided or services rendered to a tenant.

The Office of the Revenue Commissioners has published a guide to the income tax treatment of rental income. It sets out the amount of rental income to be taken account of for income tax purposes and provides a comprehensive list of expenditure items that are allowable for deduction in computing rental income for tax purposes. This guide is available at: .

The Deputy may also be aware that in Finance Act 2015 I introduced a new relief which will allow a full 100% mortgage interest deduction where a landlord undertakes, for a period of at least three years, to provide accommodation to tenants in receipt of social housing supports and registers such undertakings with the Private Residential Tenancies Board within certain time limits. Further information on this relief is available in section 97 of the Revenue Commissioners Notes for Guidance Taxes Consolidation Act 1997 Finance Act 2015 Edition Part 4 Principal Provisions Relating to the Schedule D charge, which is available at:

.

Furthermore, the taxation of all rental property in the State is dealt with under the same legislation, and an attempt to carve out a cohort of 'accidental' landlords would therefore prove problematic. There are many reasons why individuals might choose, or feel obliged, to let out a property which they own while also renting a separate property for their own accommodation, and all are treated equally by the tax system. The provision of additional tax deductions to one sub-set of landlords could also create difficulties in the rental marketplace as a result of the advantage obtained over other landlords of similar residential property.

As regards future measures, the Programme for Government contains a commitment, working with the Oireachtas, to publish a medium-term income tax reform plan for consultation with the Oireachtas Committee on Finance. The focus of the plan is to be on keeping the tax base broad, while reducing excessive tax rates for middle income earners, including landlords, and limiting the benefit for high earners.

Comments

No comments

Log in or join to post a public comment.